Professional Accounting Standards and the Public Sector—a Mismatch

Abstract

Professional accounting standards have been applied to the public sector in Australia as part of the process of adopting accrual accounting. However, the reason given for their application to the public sector is questionable. The modes of operation of governments and of the business sector are very different, and accounting standards must be tailored to suit the specific information needs of each sector for the accounting systems to provide relevant information. The four Accounting Concepts Statements and the broad requirements of AAS 29 and AAS 31 are examined to show where changes are needed in the standards to make their information more relevant to the needs of the public sector. These changes would better enable accrual accounting information systems to assist in enhancing the efficiency and effectiveness of public sector operations and the accountability of governments to parliament and citizens.

The quality and conservatism of the accounting earnings of local governments

“…Even so, the economic benefits of applying existing GAAP to these entities continues to be debated (e.g. Barton, 1999Barton, , 2005Walker et al, 1999Walker et al, , 2000. Resistance in the US to GASB-led initiatives to expand GAAP disclosure requirements for government entities is based on the costs of implementing and monitoring the expanded disclosures and questions about whether sufficient demand exists for this information (Barton, 1999;Copley et al, 1997;Jones and Puglisi, 1997;Rowles et al, 1998).…”

Accounting for Heritage, Cultural and Community Assets – Alternative Metrics from a New Zealand Māori Educational Institution

“…A key aspect of the change imposed was the implementation of a market-oriented, cost-efficiency focus towards the management of public sector organisations, described collectively as the New Public Management (NPM) model (Kelsey, 1995;Boston et al, 1996; Easton 1996;Barton, 2002Barton, , 2005aBarton, , 2005bCarnegie & West, 2005;Ball & Grubnic, 2008;Davis, 2010). This reform process included the imposition of regulatory measures requiring public sector organisations to provide annual financial reports prepared on an accounting basis comparable to those for the private sector, and incorporated an obligation to disclose (at economic values) all assets held.…”

Conceptual framework issues: perspectives of Australian public sector stakeholders

“…The country adopts a single conceptual framework for both the private and public sectors but, although the move occurred in the 1990s, it continues to attract much attention from those involved in public sector financial management as well as prominent researchers (e.g. Newberry 2003, Challen 2004, Barton 2005, Challen and Jeffery 2005, with debates continuing as to whether a separate public sector conceptual framework would more appropriately meet the needs of the public sector. Our study provides a picture of areas of concern.…”